I HOLD THIS TRUTH TO BE SELF-EVIDENT, THAT A DEBT CRISIS CANNOT BE RESOLVED WITH MORE DEBT

Sunday, May 16, 2010

If The Shoe Fits...

A dozen alumni from Euro U. Class of 2000, get together for a reunion picnic. The class president, a very thoughtful and generous fellow named Robert, brings everyone a new pair of shoes as a gift: the latest Nike trainer, size 10. Very nice of you, thanks very much... says everyone as boxes are opened and shoes tried on.

But... while Hans is very happy because he's exactly a size 10 and goes jogging all the time - picnics included - Michel is indifferent, since he's a size 10 OK, but spends his spare time at art galleries instead, where running shoes are decidedly declasse. Jorge is size 11 and prefers sand and sandals, Vittorio rarely walks anywhere but when he does he strolls in ultra-thin leather-soled loafers, Lena is a size 4 stilleto club-hopper, Anders has an extra 20 lbs. around his waist and loves fly-fishing in waders... and so on.

Yeah, riiight...mumble the classmates (Hans excepted).. it's true that a decade ago we all promised we would stay trim and fit no matter what, but c'mon dude, get a life already, huh?

P.S. I should point out that there's really nothing much new under the sun (Ecclesiastes 1:9-14, see below). A monetary union was tried in Europe before: the Latin Monetary Union was established in 1865 and fell apart in WWI, though it was formally disbanded only in 1927. Its members? France, Belgium, Italy, Switzerland, Spain and...yes... Greece.

What has been will be again, what has been done will be done again; there is nothing new under the sun. Is there anything of which one can say, "Look! This is something new"? It was here already, long ago; it was here before our time.

14 comments:

What a coincidence...I went to our local art museum yesterday...Usually I don't hang out at the museums any more. Too many people.A good expo on Impressionism.Did you know that... lots and lots of Impressionist paintings are in the U.S. because at the time they were painted the French HATED Impressionist art and thought that it was NOT GOOD art.So... the Americans made a killing on the paintings and got them while they were STILL... cheap.I wear a size 7, by the way...and I wouldn't be caught dead... running, anyway.

I think (but I certainly don't hold all the cards on this one...) that the eMu was created in order to be able to compete with perceived American economic supremacy, and in somewhat slavish... imitation.But the EU was a dream our fathers and grandfathers had to keep war out of our backyards.And in all fairness, with a few minor exceptions that are certainly NOT minor for the people involved, it has succeeded for quite some time.That is NO MEAN ACCOMPLISHMENT. Particularly when you take into account the linguistic and cultural disparities, because... different languages make different visions of the world. It is unfortunate, but perhaps inevitable that we have substituted.. economic war for physical battles.Our medieval ancestors had a less.. TOTALITARIAN and more.. SPORTING and amusing vision of war.It was NOT intended to shoot/kill anything and everything that moves.Maybe.. WHEN we get back to the "dark ages" we will rediscover some rather surprising aspects of our culture ? Along with... old suffering, of course.But suffering is what the human condition is about, anyway. There are those of us who manage to give meaning to it, and those of us who don't.

I perfectly remember the discussions in France about the Maastricht treaty in 1992/93. The EMU/Euro was created because nothing more ambitious was considered possible. My vote was "yes".

Then came 2005 and the project to put this "free and undistorted competition" into the constitutional treaty. My vote was a clear "No". It was negative because I love my old Europe, and I didn't want a bloody revolution when new generations would be against this economic system.

All the so called elites (politicians and journalists) comments were about a vote targeted against Chirac, our president at that time. If only they had listened to the people's opinions (apparently the Germans were also against that treaty but they had no chance to vote), I think that the possibly most serious problems since WW1 (according to Trichet) would not be that difficult now..

Statistics are lies, but this chart happens to fit my personal experience very well (having worked on 3 different countries and in strong multicultural environments). In fact, one of the most shocking experiences of my life was my first emigration - from overworked Portugal, to lay back Netherlands.

Two interesting comments:

Primo, the obvious - Southerners work more hours than Northerners.

Secondo, the interesting - working more seems not produce better (or richer) societies.

Work, evaluated from a quantitative perspective, is a very dangerous red herring.

I can imagine some people with so-called (nothing more that "called") protestant work ethic starting to complain: hard-work has to be good!

Hard-work is only good to placate your strict authoritarian father.

Value creation (which can be work-efficient), absence of corruption and care for the common good are much more important.

I could think of some labor intensive work -- such as picking crops -- that might require long hours, but are not what I would call "low value added." While we may have automated the harvesting of corn or wheat, I am not sure we can say the same regarding olives, for instance. Don't those still have to be picked by hand?

I see that agriculture is only 15% of the economy. So the question is: why would labor costs be so high?

In my living room is a carved chest made by a wood carver/furniture maker.It is beautiful work.Many many many hours went into making it.That... woodcarver has gone out of business because he couldn't really CHARGE THE MONEY that the chest is worth, in terms of salary per hour, THE WAY WORK IS MEASURED (among other measurement...).So.. what is the chest worth ?And are we going to blithely announce that, too bad, all this is going under because we are now consuming along the lines of LOTS of cheap, dispensable stuff vs a few, beautiful, long lasting objects, for example ?Things are already changing.In France, the wine makers who produce cheap industrialized wine whose grapes you harvest with machines are going/have gone under.But the ones whose grapes are... HAND PICKED, bottled on smaller estates, are doing ok.Even in the midst of crisis, people are learning to appreciate LESS of nicer things. Hell... war has always been fought about symbolic things. The 100 years war, as I remember, was NOT ONLY fought over territory, it had to do with whether royal territory could be transmitted through women : the Salique convention, I think. (spelling ?) It all hangs together.On Europe... I voted like you did, Arnould, and for the same reasons, basically.At the time, my entourage was flabbergasted. My husband and I were the ONLY people among those we hung out with to vote AGAINST the European Constitution.I am one of the few people who actually opened it up. It was more than 600 pages long... (Compare to U.S. constitution, how many pages, Okie ? Not many. 600 ? NO WAY.)I read the intro and the conclusion. Enough to figure out that... we were being asked to federate around MONETARY/economic union, and that was the total extent of the... uh.. political ? LOL ambition of that constitution.No go. Not.. ambitious enough for me.Enshrining Mammon in the Constitution ?Even the American coins have... "In God we trust", (even if people no longer believe in "him") graven on them.

My father has around 15 olive trees (in a terrain - with water - which has a market value of nothing). He normally pays for other people to go there and catch the olives, by hand. I think it is 2 people at 35€/day for 2 days or so.

The cost of getting the olives shocked me, and he told me that the cost of the olive oil was around 5€ a litter. Much, much more than the supermarket cost where the olives are removed by an industrial process (a machine that shakes the tree brutally, without apparent consequences to the long term viability of the tree - something that is worth seeing).

A few random comments:

1. It is possible to mechanize the gathering of olives in a large extent

2. This mechanization is dependent on cheap fuel...

3. My father could sell his (small) produce very easily at a handy profit: there is a clear market for hand-made stuff. He prefers to keep it for him.

I have this feeling that, while currently hard-work is clearly a psychological and moral disease, in the near future will be needed again in order to replace cheap energy.

A final comment: my father has a rural house in a village where most houses are abandoned, where you can buy an allotment for very little (easily way below 5000€). I happen to believe that his place, in the middle of nowhere is worth a lot, surely much more than a condo in Lisbon (some selling for >500.000€ to above 1M).

The next question, Tiago is...Is there any such thing as.. Americans ?We will see in the next few years, too..One of the logical consequences (or is it a cause ?) of this fiat fiasco is that the nation state as a way of federating people and giving a sense of community identity is in... a big pile of trouble...So.. the problem is not just Europe. What's holding.. France together ? (Fortunately there's one language for the time being...) The Republic isn't in such great shape these days. France has a much longer.. nation state tradition than, say... Italy, or Germany, for example. Built right on top of the monarchy. Which was REALLY centralized. The current polarization in the U.S. still follows the traditional antagonisms between North and South (with certain exceptions, granted...).Small, artisanal olive oil producers are very popular in France these days.But I can understand why your Dad would want to keep his oil for him, too. Hey... I spend 2-3 hours a day playing the piano.. for me...

Still thinking about those olives trees, and Europe, Tiago...Last night I listened to "Le Plat Pays", Jacques Brel.About home. Jacques' home. Belgium.And when I listen to Jacques talk about his home, I get all. NOSTALGIC for it.How is it that we can get the most nostalgic about places we have never been before ?(Like.. the garden, for instance. Most of us have NEVER been in the Garden, if you know what I mean.)But it doesn't keep us from being nostalgic about it.I feel at home... in Chopin's Nocturnes, Mozart's operas.I feel at home... in art, literature.And SOME physical places.. not many, though.Mostly uninhabited, too...

About Me

I was educated as a chemical engineer but spent almost my entire career in finance, particularly in money, FX and bond markets. The name stands for Hell-as-IOUs and the picture points to Quixotic endeavors.